Re-reading the email from the senior manager of InterOil's media relations department reminded me of one of the best ever. I referenced it in a post on Planktos which long time readers will remember as one of the best shorts ever....

A report by former LA Times reporter William Lobdell in iBusiness Reporting and an accompanying press release by Fraud Discovery Institute provide disturbing details of fraud allegations made in an ongoing court case by the original investors in InterOil (NYSE: IOC) against company CEO Phil Mulacek. The court documents obtained by Lobdell provide an inside look into Mulecek's desperate court room antics to avoid responsibility for his actions which were later scolded by the Judge in the case. In addition, filings with the Canadian Securities Commissions show that InterOil insiders dumped about $10 million of stock in recent weeks.

Is InterOil Corporation Built On A Foundation Of Fraud, Asks FDI's Barry MinkowLawsuit, set for trial in May, alleges InterOil (NYSE:IOC) CEO Phil Mulacek used a variety of illegal schemes to enrich himself and defraud original investors.

For Immediate Release

SAN DIEGO/EWORLDWIRE/March 26, 2010 --- A potentially massive lawsuit by many of InterOil Corporation's (NYSE: IOC) original investors, who are seeking up to $1.3 billion in damages, worried company CEO Phil E. Mulacek so much that a certain company he controls filed a bad-faith bankruptcy in an apparent attempt to derail litigation set for trial this May. In fact, federal Judge Marvin Isgur said that Mulacek's credibility "diminished" by building a key argument in bankruptcy papers upon a lie.

In a special report released today by iBusiness Reporting ('http://www.ibizreporting.com') - a division of the Fraud Discovery Institute Inc., former Los Angeles Times journalist William Lobdell details stunning allegations made by about 20 original investors in what is now InterOil. Among the claims: InterOil CEO Phil Mulacek forged documents, secretly created a shadowy Bahamian company, and ignored "crippling conflicts of interest" in order to enrich family, friends and himself.

So desperate was Mulacek to evade the consequences of his actions relating to a case going to trial this May, that he filed bankruptcy for a company he controls in what seems an attempt to derail the lawsuit, which is asking up to $1.3 billion in derivative or stockholder claims.

In one candid admission, Mulacek and his attorneys testified that even a $50 million judgment for the plaintiffs would be "devastating" to InterOil. The bankruptcy testimony also showed the precarious financial condition of InterOil, with $60 million in cash and massive amounts of money needed to drill wells ($1 billion), construction of a pipeline ($900 million) and the building and construction of a liquefied natural gas (LNG) plant ($5-7 billion).

To date, InterOil hasn't found any commercial oil or gas.

Federal Judge Marvin Isgur ruled that Mulacek had filed the bankruptcy in bad faith, and the executive's credibility was "diminished" by building a key argument for bankruptcy upon a lie.

"It's hard to know where to start - there's so much in this special report," said Barry Minkow, cofounder of the Fraud Discovery Institute (FDI). "The most serious of these claims is the most obvious - the very foundation on which InterOil was built is a fraud based on the intentional inflation of an asset costing $250,000 which allowed InterOil to refine unleaded gasoline. It was reported to investors by Mulacek to have cost $15 million.

"It is the very artificial inflation of assets that is at the core of the InterOil scheme. Mulacek simply added zeroes in the current scheme - instead of a refinery component not being worth $15 million, he now touts oil and natural gas exploration sites in PNG as being the largest find in the world, yet to date, not one drop of commercially viable reserves has been sold by the company."

The lawsuit also alleges the deception started with one of the company's first assets and that scheme gave an offshore company secretly controlled by Mulacek 5.1 million shares of InterOil - 25 percent of the company's stock at the time - in exchange for nothing.

"This would be nearly unbelievable if this was any company other than InterOil," Minkow said. "All you get is hype-feeding-hope, and criminals know people live on hope and exploit that hope with spin and lies. The company lied about fees paid to Clarion and John Thomas. The company hyped with an endless string of press releases, and yet there are still no commercial reserves and no partner."

Because this information can be found in court documents in the public record and available on IBizReporting.com at 'http://www.ibizreporting.com', it cannot be refuted "no matter how many diversion names supporters call me or other detractors," added Minkow.

According to Lobdell's report, a couple of days before filing the filing of the "bad-faith bankruptcy" which the Judge later tossed out, Mulacek "dumped nearly $1.5 million worth of InterOil stock....">>>MORE

Shia LaBeouf, who is starring as Gordon Gekko's protege in the upcoming Wall Street sequel, recently offered a strange text message to a GQ reporter working on a story on him: "IOC's momentum is major, and it will surprise to the upside."

IOC is Interoil (IOC), an oil and gas exploration company with a $3 billion market cap and no proved reserves. Ex-con turned fraud fighter Barry Minkow has alleged that the company is nothing more than a pump and dump (see his website devoted to the company InterNoOil.com).

Equally interesting is that prior to joining InterOil as a PR person, Andrews was an equity analyst who covered the company.

Hedge fund manager Whitney Tilson is short the company and in a recent email newsletter noted that Interoil could be could be "one of the largest stock promotions ever, going on right under [the SEC's] nose..."

What's especially interesting about this latest Interoil news mention is this line from a New York Post piece: "InterOil spokesman Wayne Andrews said that although the company isn't currently making money on its oil and gas exploration, and that a plant may take to 2015 to build, the stock is not overvalued."

It is extremely unusual for a corporate spokesman of a public company to argue to the media outright that the company's stock is not undervalued. Ken Lay and Jeff Skilling used to do that in the days of Enron but, in the post-Sarbanes Oxley world, it never happens.

HT UPDATE: ClusterStock just completely rewrote their story with no indication that they had done so. Tacky and amateur. The original was basically the BloggingStocks piece immediately above. Now it has Antar's allegations and no hint of the rewrite. Sigh.